TheChek News Flow

Pro-government militias sense opportunity to claw back territory from Iran-backed militants

Yemeni militias are planning a ground offensive against the Houthis in an attempt to take advantage of a U.S. bombing campaign that has degraded the militant group’s capabilities, Yemeni and U.S. officials say.

The Yemeni factions are sensing an opportunity to oust the Houthis from at least parts of the Red Sea coast they have controlled in the decade since they took power over much of the country’s northwest, the officials said.

Private American security contractors provided advice to the Yemeni factions on a potential ground operation, people involved in the planning said. The United Arab Emirates, which supports these factions, raised the plan with American officials in recent weeks, the U.S. and Yemeni officials said.

The U.S. is open to supporting a ground operation by local forces, the U.S. officials said, while noting that a decision on whether to back the effort hasn’t been made yet. The U.S. isn’t leading the talks for a ground operation, the officials added. The discussion involves empowering the local factions allied with the internationally recognized government in Yemen to take charge of the country’s security, they said.

“Ultimately, security in the Red Sea is the responsibility of our partners in the region, and we’re working closely with them to ensure shipping in those waterways remains safe and open far into the future,” National Security Council spokesman Brian Hughes told The Wall Street Journal last week.

Under the plan being discussed, the local factions based in the country’s south would deploy their forces up the Houthi-controlled western Yemeni coast and try to seize the Red Sea port of Hodeidah, Yemeni officials said.

If successful, the ground operation would push the Houthis back from large parts of the coast from where the U.S.-designated terrorist group has launched attacks on ships transiting nearby waters. Capturing Hodeidah would be a major blow to the Houthis, depriving them of an economic lifeline while also cutting off their main route to receive arms from Iran. Tehran publicly denies that it supplies the Houthis with weapons, but United Nations inspectors have regularly traced seized weapons shipments back to Iran.

Senior Houthi leader Mohammed Ali al-Houthi said the U.S. air campaign had failed to stop the group and a ground operation would meet the same fate.

The discussions over a ground operation come as American officials say the U.S. is considering options on how to wind down its air offensive in Yemen, with the Trump administration eager to demonstrate its commitment to limited campaigns and avoid endless wars. A major ground offensive risks reigniting a Yemeni civil war that has been dormant for years and that spurred a humanitarian crisis when a Saudi-Emirati coalition supported local ground forces with a bombing campaign.

The Houthis began to attack ships transiting the Red Sea and nearby waters soon after Israel sent its forces into Gaza in response to the October 2023 Hamas-led attacks in southern Israel that killed 1,200 and led to the kidnapping of about 250 people. Most commercial-ship traffic is still being redirected to the long way around southern Africa and away from the Red Sea and the Suez Canal.

The U.S. launched its operation targeting the Houthis on March 15, saying it was meant to defend American interests, deter enemies and restore freedom of navigation in one of the most important commercial shipping waterways. The U.S. has launched more than 350 strikes during its current campaign, U.S. officials said. The U.S. military hasn’t released any battlefield assessment since the initial strikes.

Nearly a month of U.S. strikes has shown mixed results, said Yemeni officials and close observers of the war in the country, noting that airstrikes alone won’t defeat the Houthis. Since the U.S. airstrikes began, the Houthis have launched missiles and drones near the USS Harry S. Truman, an aircraft carrier stationed in the Red Sea. They have also resumed their attacks on Israel.

U.S. officials said a second aircraft carrier and its accompanying ships just arrived in the region, likely leading to increased strikes for at least several more weeks.

Still, the possibility of supporting a ground operation raises complications for the U.S., which backed a coalition of around a dozen Arab countries, led by Saudi Arabia and the U.A.E., against the Houthis during Yemen’s long-running civil war. That conflict ended in a 2022 truce, though low-intensity fighting has continued between the Houthis and some Saudi- and U.A.E.-backed factions. Officials from Saudi Arabia, a chief patron of the Yemeni government, have privately told American and Yemeni officials they won’t join or help a ground offensive in Yemen again, fearing the damaging ballistic missile and drone attacks the Houthis previously launched at Saudi cities.

The considerations come as the U.S. began talks with Iran over its nuclear program in Oman on Saturday. U.S. officials have said Washington wants to bring Tehran’s support of regional allies such as the Houthis into the conversation, but the topic didn’t come up for discussion in Muscat, according to people briefed on the talks.

At the same time, the U.S. is also working with Arab mediators on a cease-fire plan for the war in Gaza. The Houthis have said they would stop attacking Red Sea shipping if the war in Gaza ends.

The Houthis have spent years stockpiling missiles and drones, hiding them in caves or underground facilities where they have built weapons assembly lines and launching facilities.

A ground operation will help target military infrastructure that is difficult to hit from the air, analysts and observers say.

“We have been ready and prepared since day one to liberate Hodeidah and all areas under Houthi control—with or without American involvement,” said Waddah Al-Dubeish, a spokesman for the Joint Forces on the West Coast, a group of pro-government militias. But he said the decision ultimately lies with the Yemeni government and the Saudi-Emirati military coalition that backs it.

Tareq Saleh, the head of the Yemeni National Resistance faction, said military action was the only way to end the threat represented by the Houthis.

Riyadh may change its mind if the Houthis turn threats against Saudi Arabia into attacks, said Mohammed al-Basha, a U.S.-based Middle East security analyst for Basha Report.

Spokespeople for the U.A.E. and Saudi Arabia didn’t respond to requests for comment.

The Biden administration, which was trying to avoid a wider Middle East war as Israel and Hamas clashed, sent U.S. warships to try to protect international shipping and conducted strikes against the Houthis. But the Trump administration has been more aggressive and has expanded its list of targets to include Houthi military leaders.

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EU explores legal options for ending Russian gas deals

Brussels says invoking ‘force majeure’ clause would allow contract termination without penalties

Brussels is exploring legal options that would allow European companies to break long-term Russian gas contracts without paying hefty penalties to Moscow.

The European Commission has been studying the contracts and the possibility of declaring force majeure, which would allow importers to exit their obligations without paying additional fees, according to three officials with knowledge of the plan.

“If the whole idea is not paying Russia, then [paying compensation] would undermine the whole purpose,” one EU official said.

The move highlights the EU’s struggle to wean itself off Russian energy and deprive the Kremlin of revenues for its war in Ukraine. Moscow’s gas now makes up just 11 per cent of the bloc’s supplies via pipeline, compared with almost two-fifths in 2022, but volumes of Russian liquefied natural gas LNG have increased rapidly in the past three years.

Commission lawyers are exploring legal options as part of a road map on how the bloc will rid itself of Russian fossil fuels by 2027. The plan comes at a critical time for the EU as it also tries to present an energy deal to the US to counter President Donald Trump’s tariff regime.

The Commission declined to comment.

The US is already the bloc’s biggest supplier of liquefied natural gas and is seen as an obvious replacement for any further reduction in Russian fuel.

The EU paid €21.9bn to Russia for oil and gas between February 2024 and February 2025, according to the Centre for Research on Energy and Clean Air.

Unlike Russian coal, gas has not been subject to an import ban, while the EU has prohibited 90 per cent of oil imports from Moscow. Imports of the country’s shipped gas increased about 60 per cent over the past three years, but total Russian gas exports to the bloc are still the lowest since 2022.

The road map — originally meant to be published in March — has been delayed in part because of concerns that any ensuing legislation would be blocked by Hungary and Slovakia, which now account for most of the remaining piped gas still flowing into the EU.

Hungary’s pro-Russia government has threatened that it would reject gas sanctions, which need unanimous approval from the EU’s 27 member states.

The road map has also been pushed back because of early discussions over the future of the Nord Stream pipeline connecting Germany and Russia, which have been revived amid US efforts to find a rapprochement to end the Ukraine war, and the inclusion of gas purchases in trade talks with the Trump administration.

“It’s a mess,” one EU diplomat said. “How does the US fit in all this? How do we diversify?’’

European Commission president Ursula von der Leyen, however, told the Financial Times that the plan should be published in “three to four weeks”.

Despite pressure from Brussels, EU nations are wary of forcing companies to cut LNG contracts with Russia amid concerns that it will push up prices when companies are struggling with geopolitical turmoil and high costs.

The Commission gave member states powers to prevent Russian and Belarusian operators hooking up LNG to port infrastructure or sending their gas through EU pipes, but ministers have complained that this does not give them strong enough legal means to force companies to break their contracts.

The complexity for the commission’s lawyers is that contracts are secret and tend to differ. Using the war in Ukraine to call force majeure may not be legally sufficient, one EU official said.

France, Spain and Belgium’s ports are the main import hubs for Russian LNG. Moscow’s Yamal LNG plant still holds contracts with some of the EU’s biggest energy companies including Shell and Naturgy.

Brussels-based think-tank Bruegel this month argued in favour of tariffs rather than a full ban on Russian gas imports, noting that the former would generate revenue for the EU and force Russian suppliers to lower prices to remain competitive. Unlike sanctions, tariffs only require a majority of EU member states to back them in order to be approved.

“An effective common tool on Russian gas imports is urgently needed — as otherwise Russia might again use (the prospect of) selective gas supplies to fuel profound discord among member states,” they wrote.

British Steel needs a forever subsidy

Making steel at home is a trade-off that seems more appealing when global trust in commerce is scarce

Globalisation hangs on a simple, alluring idea: make things where doing so is cheapest, then ship them to and fro. But it only works if the second half of that scenario remains viable. If there’s a chance your trade partner might use their commercial heft to strong-arm you, it might be better to pay a bit more, and keep what’s really important under your direct control. 

Steel is a solid example of where the pendulum has swung back from efficiency to certainty. So the UK’s decision this weekend to wrest control of lossmaking British Steel from its Chinese owner Jingye — and hence ensure it keeps running — has barely raised an eyebrow. The idea that the UK might lose its last remaining blast furnaces, and therefore its ability to make new steel from iron ore, is apparently too terrible to contemplate.

Behind this fear lie others. Loss of employment is one. Newer production technologies — such as melting scrap in electric arc furnaces, which could fit a country that exports a lot of unwanted metal — used to be associated with lower grades of steel, though this isn’t necessarily the case any more. All these strands get tangled up with the UK’s attachment to a metal that holds a central spot in its history as an industrial powerhouse.

The fact is that keeping steel production in the UK requires a forever subsidy. Globally, capacity is perhaps 30 per cent higher than demand. The cost of energy is a big factor in steelmaking; producing the stuff in Europe is only barely competitive, in the UK even less so.

The net result is that China is a big exporter. Both the UK and Europe are net importers. Local mills are barely profitable, if at all, and the UK’s steel supply chain is creaking everywhere. By way of example, Manchester-based steel service centre Malcolm Clarke is set to close this summer.

The whole issue is complicated by US tariffs, and the fact that — in both Europe and the UK — steelmaking will need to eliminate carbon dioxide emissions to meet net zero targets. The pathway for blast furnaces to go green requires using hydrogen, rather than coal, as a feedstock in the process. That means additional investments, and extra energy costs.

There are workarounds. Europe could boost its competitiveness for a while with a carbon border adjustment mechanism, which is basically a tax on the carbon intensity of imported steel. But, in the long term, Europe’s green energy costs are likely to be a lot higher than those of sunnier and windier areas of the world.

Ultimately, making steel at home is a trade-off that seems more appealing when global trust in commerce is scarce. With enough will, British Steel’s furnaces can be kept alight. But whether in the form of direct subsidies, lower energy costs, or mandated procurement quotas, security comes at a cost that taxpayers and consumers will have to bear.

Trade, tech and Treasuries: China holds cards in US tariff stand-off

Planning, diversified markets and control of strategic materials potentially give Beijing leverage — if it can bear the pain

The US and China are locked in a dangerous trade stand-off, with the world’s two largest economies trading tit-for-tat blows as Donald Trump demands Beijing seek a deal from his administration.

China relies on the US as an almost irreplaceable market for its manufactured goods, but experts warn that Washington should not underestimate Beijing’s capacity to resist Trump’s coercive tactics. 

The combination of centralised political control, increasingly diversified export markets and its virtual stranglehold on some strategically vital materials, including rare earth metals, gives Beijing plenty of negotiating power. The question is how far it can use its leverage without suffering even more damage itself.

Trade power

China had a trade surplus of almost $300bn with the US last year, with about 15 per cent of its total exports heading into the US. Trump’s tariffs of 145 per cent would inflict significant pain on Beijing.

But international economists said this overlooks one crucial fact: China can replace its imports from the US more easily than the other way around.

US goods exports to China are heavily focused on agriculture — such as soyabeans, cotton, beef and poultry — and so are low value-added. Many US imports from China — electronics, machinery and some processed minerals — are the opposite.

Marta Bengoa, professor of international economics at City University of New York, said that while the US and China remained heavily interdependent in trade, this meant the ultimate balance of risk was on the US side. 

“US dependence on China is higher, because China can source agricultural products from elsewhere more easily than the US can replace electronics and machinery,” she said. “Beijing is already buying up soyabeans from Brazil, for example, so in the end China has a bit more leverage”.

The depreciating dollar has also made it more expensive for the US to import goods.

The pain of a trade war will still be felt in China, which imports higher-end products from the US, including aircraft parts, pharmaceuticals and semiconductors — although Washington has sought to restrict access to chips in recent years. Many American businesses are embedded in supply chains on the ground in the country.

Goldman Sachs analysts estimated that 10mn-20mn workers in China may be exposed to US-bound exports. “The combination of extremely high US tariffs, sharply declining exports to the US and a slowing global economy is expected to generate substantial pressures on the Chinese economy and labour market,” they wrote last week.

Strategic ‘backdoor’

Since Washington imposed sectoral tariffs on steel, aluminium, solar panels and washing machines in 2018 and 2019 during Trump’s first term, China has tried to reduce its reliance on exports to US consumers. Its share of US imports has fallen from 21 per cent in 2016 to 13.4 per cent last year, according to US government data, slashing Beijing’s trade exposure.

At the same time, Chinese production capacity has been rerouted through south-east Asian countries such as Vietnam and Cambodia, where Chinese manufacturers took advantage of cheaper labour and reduced exposure to US tariffs. Exports to Vietnam soared 17 per cent in March, data released this week showed.

How determined Trump is to shut that “back door” for Chinese exports remains to be seen. Vietnam, which now runs a $124bn trade surplus with the US, has been threatened with a “reciprocal” 46 per cent tariff — though this was suspended for 90 days.

Alicia García Herrero, chief economist for Asia-Pacific at French investment bank Natixis and a senior fellow at the Bruegel think-tank, said the pause provided some breathing space. “Essentially that gives both sides 90 days of leeway in order to figure things out.”

But even if there was a hard cessation of Chinese exports, García Herrero said the impact would not be catastrophic on China’s sprawling economy. The country’s GDP grew 5 per cent last cent last year, 1.5 percentage points of which was derived from its near-$1tn global trade surplus.

“China is a humungous economy that is resilient,” she said.

But analysts also warned that Chinese attempts to redirect excess capacity to alternative markets including the EU, India and countries across the global south could invite blowback. 

“Because of the surplus of goods that China is going to be looking to offload, I would expect other countries to react to the potential deluge,” said Alex Capri, senior lecturer in the Business School at the National University of Singapore.

Financial holdings

China enjoys further leverage from the large pile of US government debt it has accumulated, which it could in theory sell to reduce its exposure. That in turn could raise concerns about the attractiveness of US assets and precipitate further declines in value of the dollar and US government debt.

Zerlina Zeng, head of Asia credit strategy at CreditSights, noted that a sell-off in Treasuries would also hit China, given the size of its holdings.

“That said, we expect China to continue diversifying its US dollar-denominated reserves into other currencies as a long-term allocation goal,” she said.

Critical minerals

The US is also reliant on China for many rare earth metals essential for modern manufacturing, such as in electric vehicle batteries. Beijing controls more than two-thirds of global rare earth production and more than 90 per cent of processing capacity — a critical point of leverage.

Trump excluded critical minerals from his first round of “reciprocal” tariffs in an acknowledgment of US vulnerabilities. But such waivers may not be enough to avoid a supply crunch if China digs in.

China placed export controls on seven more rare earth elements last week, including dysprosium and terbium, which are essential ingredients in products such as jet engines and EVs. 

Autocracy over democracy

While China’s ruling Communist party is not immune to swings in public opinion, it is less reactive to pressure than the White House, which has already been forced to respond to turmoil in the bond and stock markets and the threat of higher prices.

Alfredo Montufar-Helu, head of the China Center at the Conference Board think-tank in New York, noted that Beijing — despite contending with challenges of its own — was entering the trade stand-off with a greater capacity to stimulate its economy in the event of a slowdown.

It also has more levers to manipulate its domestic market, which Chinese authorities watch as an indicator of social stability and economic sentiment. Beijing has intervened heavily in the market in recent weeks, with the “national team” of state institutions driving co-ordinated action to support share prices.

But China’s government is also highly sensitive to displays of public discontent. In late 2022, it lifted its three-year Covid-19 restrictions shortly after protests emerged in major cities.

“Just from the market reaction, I’d say the US at the moment [is hurting more],” added Julian Evans-Pritchard, chief China economist at Capital Economics. “The US is under more pressure to try to come to the table and negotiate.”

But the first tremors of a trade war — such as delayed sailings from China’s vast ports — have yet to feed into open dissatisfaction in China’s southern manufacturing provinces.

“I haven’t met a single person, even manufacturers directly impacted by the tariff, who blames Beijing,” said one foreign manufacturer based in Guangdong province. “The mood that I’ve seen is a kind of defiance. I think the way the government is playing it is about national pride now.”